The 10-year Treasury yield rose 1.5 basis points to 5.131%, while the 30-year yield added 1.6 basis points to reach 5.440%, according to Tradeweb. Despite the uptick, yields remain below recent multidecade highs as the market recalibrates its outlook on the Federal Reserve’s future monetary policy, despite fully discounting three rate hikes over the coming year.

Luca Cazzulani, head of strategy at the UniCredit Investment Institute, suggests that current levels provide favorable asymmetry for medium-term investors. He notes that even if 10-year yields were to climb by another 50 basis points, investors could still realize a positive one-year total return of roughly 2%. Conversely, a 50 basis-point decline could result in returns nearing 9%. However, Cazzulani warns those with shorter horizons to exercise caution due to persistent rate volatility.

Market attention now shifts to a $13 billion auction of 20-year bonds. JPMorgan strategists remain skeptical of the current environment, citing unattractive macro conditions and unsupportive technicals ahead of the sale.